An Offshore Exploration Drilling review

An Offshore Exploration Drilling review Exploration Day – 20/11/2019

Linda Janssen – Geoscientist

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Outline

❑ Exploration wells

❑ Overview

❑ Success ratios & POS

❑ Volumes & Depth

❑ Mean Success Volume

❑ Depth forecasting at target level

❑ Success ratios and depth accuracy

❑ Cost

❑ Planned vs. actual drilling days

❑ Conclusions and lessons learned?

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Exploration wells 2005 - 2018

126 Exploration wells with EBN participation:

❑ Onshore 34

❑ Offshore 92

Primary targets:

❑ Rotliegend (66)

❑ Bunter (35)

❑ Other: Chalk, RijnlandGroup, Jurassic, Zechstein, Carboniferous (25)

Primary targets

Operators*

CK KN JU RB ZE RO DC Total

Dana 2 2 5 2 1 12

Neptune 1 10 14 4 29

NAM 5 23 28

ONE-Dyas 2 6 5 13

Petrogas 0

TAQA 2 3 5

Total 1 1 3 5

Tulip 1 1

Vermilion 2 1 4 7 14

Wintershall 3 4 9 2 18

Total 7 2 4 34 6 66 6 126

*including predecessors

25(20%)

66(52%)

35(28%)

34(27%)

92(73%)

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Success per target

❑ 60 years after Groningen the Rotliegend still is the most important (and successful) target

Primary target

Wells drilled

Technical Successful

Success Ratio

Other* 25 14 56%

Bunter 35 20 57%

Rotliegend 66 47 71%

Total 126 81 64%

*Other = Chalk, Rijnland Group, Jurassic, Zechstein, Carboniferous

**Assuming an estimated average recovery factor (RF) of 75% (based on 85% RF for Rotliegend and lower RF for other targets)

***Post drill expected recoverable immediately after drilling

Expectation (POSg*MSV)

(bcm)

EXP * 75% Recovery Factor**

Post Drill* Expected

recoverable(bcm)

Volume ratio

Volume Ratio

(including 75% RF)

Volume / successful

well

29,6 22,2 13,2 45% 59% 0,94

37,6 28,2 12,7 34% 45% 0,63

64,4 48,3 42,5 66% 88% 0,90

131,6 98,7 68,5 52% 69% 0,85

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Success?

With sufficient wells we should find Σ Expectation:

Too optimistic on POSg, MSV or both?

EXP (Expectation) = Mean Success Volume

(MSV) * Probability of Success (POSg)

*NB: oil in BCM GE

126 exploration wells Volume (bcm)

Σ Expectation (MSV*POS) 132

Σ EXP * 75% RF 99

Post drill expected recoverable* 69

∆ volume -30

69%

*Note: Post drill expected recoverable immediate estimates

after drilling

Pre-drill Expectation (POSg*MSV)

Post-drill Expected Recoverable

Number of wells

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Creaming curve Offshore

0

200

400

600

800

1000

1200

0 100 200 300 400 500 600 700 800

Cu

mu

lati

ve G

IIP

(N

m3

)

# exploration wells

Offshore

Offshore: not (yet)

creaming off

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Success ratio and POSg

→ Success ratio is larger than POSg

(*until 2018)

In other words: we are more successful than we expect!

All wells (126)

Technical success ratio (81 out of 126 successful)

64%

Commercial success ratio(69 wells producing, development incl. expected developments)

55%

Average POSg (pre-drill) 53%

0

5

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25

0%

10%

20%

30%

40%

50%

60%

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90%

100%

20052006200720082009201020112012201320142015201620172018

Nu

mb

er o

f ex

plo

rati

on

wel

ls

PO

S &

Su

cce

s ra

te (

%)

Year

Average POSg and success ratio

Successful wells Dry holes Avg POS/yr

Success ratio/yr Success rate all 126 wells

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Success ratio and POSg

POSg grouped in classes of ~20% for 126 wells

Conclusion still the same:

❑ all POSg’s are underestimated

❑ Average success ratio is higher than POSg range

But: Higher POSg means higher EXP, but since we find less than ΣEXP →

MSV too optimistic?


(MSV) * Probability of Success (POS)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0-25% 26-40% 41-60% 61-80% 81-100%

Act

ual

su

cces

s ra

tio

(%

)

Postdrill success ratio vs. predrill POS

POS

10

38

28

34

16

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Outline


❑ Overview


❑ Volumes & Depth




❑ Cost



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Let’s recap…

With sufficient exploration wells we should find the Expectation volume, but we only find 69%

Too optimistic on POSg, MSV or both?

POSg

❑ POSg is often underestimated → we are more often successful than we expect!

MSV

Potential reasons for too optimistic MSV:

❑ Positive skew

❑ Uncertainty in depth forecasting at target level


(MSV) * Probability of Success (POSg)

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Σ EXP * 75% RF 99


∆ volume -30

69%

Success Volume

Potential reasons for too optimistic MSV

EBN’s prospect database shows:

LSV (P90) = 0,4 x MSV

P50 = 0,86 x MSV

HSV(P10) = 1,8 x MSV

We find 69% of our predrill Expectation estimates or ~P60

(HSV values will drive the Mean to high end, i.e. MSV > P50 and certainly >>P70)

→ Positive skew does not explain the difference

*NB: oil in BCM GE

Most – if not all – prospect volumes are positively skewed

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Volume prediction

UnderpredictedOverpredicted

∆ v

olu

me

(b

cm

)

❑ Bias observed towards being overpredicted

❑ EBN is currently studying in detail which parameters (porosity, net/gross, time depth conversion etc..) control the overprediction phenomena



Σ EXP * 75% RF 99


∆ volume -30

69%

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Forecasting reservoir depth

13% of well targets come in shallow

60% come within 25m depth error

27% of well targets come in deep

De

lta

re

serv

oir

de

pth

(m

) a

ctu

al

-p

rog

no

sed

❑ Top reservoir depth is often under/over predicted

❑ 40% of the wells come in >25m shallower or deeper than prognosed

❑ Coming in too deep may have effect on:

❑ Column height

❑ Possibly on spill point

❑ But, unlikely to explain 31% lower volumes

What is the reasons that more wells come in deep than

shallow?

Effect on success ratio?

Optimistic MSV related to depth forecasting?

Delta reservoir (m) = prognosed depth top reservoir vs. actual depth top reservoir (drilled)

Shallower than prognosed

Deeper than prognosed

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Forecasting reservoir depth (bias?)

❑ There is a bias in the depth errors towards being deep to prognosis

❑ Most depth errors caused by uncertainty in time-depth conversion

❑ An explanation can be given by the selection bias; structural highs are more likely to be selected for drilling in the portfolio ranking process (Hoetz, G. EAGE,

2016)

Why biased estimates?Selective sampling*: bias

* Structural height is an important selection criterion

For more detail: Hoetz, G. Observations from systematic depth conversion reviews and its impact on the drilling portfolio, EAGE 2016

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Bunter and Rotliegend

Wells Successful Ratio

Bunter 35 20 57%


Total 101 67 66%

Average success ratio is 64% (81/126 wells)

Shallow and deep wells below average success ratio (but, limited population of wells)

101 wells (RB, RO)

15/26 (58%)

deep successful

6/13 (46%)

shallow successful

NB: 1 well did not reach its target

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Bunter and Rotliegend101 wells (RB, RO)

15/26 (58%)

deep successful

6/13 (46%)

shallow successful

NB: 1 well did not reach its target

46/61 (75%)

successful

Conclusion:

Wells with good depth prognosis have a higher technical success ratio

Wells Successful Ratio

Bunter 35 20 57%


Total 101 67 66%

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Discovered resources: all wells

Remember….

Discovered resources vs. EXP of 69% for all wells

*NB: oil in BCM GE


after drilling



Number of wells

EXP (Expectation) = Mean Success Volume (MSV) * Probability of Success (POS)



Σ EXP * 75% RF 99


∆ volume -30

69%

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Discovered resources: Depth error <25 m

Expectation vs. post drill expected recoverable for wells with depth error <25m:

Conclusion: Better estimate of depth uncertainty may result in better volume predictions (69% → 75%)

78 wells (depth error <25 m) Volume (bcm)


Σ EXP * 75% RF 51


∆ volume -6

75%

*NB: oil in BCM GE



Number of wells


after drilling

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Outline


❑ Overview


❑ Volumes & Depth




❑ Cost



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Cost: Drilling days

❑ Comparison based on drilling days (planned vs. actual); tested and dry

❑ Does not take into account deviated vs. vertical holes, etc.

❑ Indicative only!

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

220%

-60

-40

-20

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1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121

Day

s o

ver/

un

de

rru

n

Pe

rce

nta

ge o

ver/

un

de

rru

n (

actu

als

vs A

FE)

Individual wells

Over/underrun drilling days: planned vs. actual

> 50% (23)

+ 15% - +50% (34)

-20 - + 15% (52)

< -20% (14)

Days over/under

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Cost: planned vs. actual drilling days

Costs

❑ Total drilling AFE’s 2005 -2018 €2,1 billion (includes onshore wells)

❑ Total spend estimation ca. €2,7 billion

Planned vs. actual drilling days

❑ 53% of the wells > 110% planned days

❑ 23% of the wells < 90% planned days

❑ 47% between -20 and +20% planned days

❑ On average 29% more drilling days than planned

❑ In total 126 wells took 4,8 years longer than budgeted for 23,3 rig years

No correlation between targets coming in deep or shallow and overrun on drilling days (R=0,14)

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Conclusions & lessons learned (1)

Success ratio & POS

❑ ΣEXP (POS*MSV) is overestimated – only ~69% of predrill estimates found

❑ Average POSg underestimated by ~11% compared to technical success ratio

❑ → We are more often successful than we expect

❑ → Commercial success ratio (55%) close to average POSg (53%)

❑ → MSV may be overestimated

Depth & volumes

❑ 40% of the wells come in >25m shallower or deeper than prognosed.

❑ There is a bias in depth forecasting towards being deep to prognosis

❑ Wells with a good depth prognosis have a higher technical success ratio (for Bunter and Rotliegend targets)

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Conclusions & lessons learned (2)

Drilling days and costs

❑ On average 29% more drilling days than planned

❑ Only 47% of the wells is drilled in the bandwidth of 80-120% of planned drilling days

❑ Total drilling AFE (dry/tested) of € 2,1 bln, real cost estimated of ~€ 2,7 bln

Recommendations

❑ Proper post-drill well analysis, we must learn from our mistakes

❑ Peer reviews

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-20

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Depth prognosis error per well per year with moving averageSh

allo

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rogn

osi

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)D

eep

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(m)

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Mo

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average

Take home message

We are improving depth forecasting due to technical improvements, there is hope for improving our volume predictions in the future!

energisingthe transition

Documents

An Offshore Exploration Drilling review